I do not want to name them. I do not want to embarrass them. But if forced, I shall.
"We would never go to those lobbies at airports. That is just not for us". Sorry, folks, I have seen some there too.
They have also said they are not flying executive class. Wrong again. They do. These are the same members that say they are going to take a cut in salaries. Of course some have, but many have not. That is a double standard.
When Canadians hear of that party doing that kind of thing, it will have no credibility. It has very little credibility today.
One of the members said this morning that if the current plan had continued that member would have received $1.2 million, if that member lived long enough, but if it had been done through private investment it would have been roughly half of that, $600,000. I stand here today hoping very much that I will be able to retire and receive $600,000 over a lifetime. The way I figure it, I will be over 80 years old before that happens to me.
Those are the kinds of misleading statements that inflame the passions of Canadians. It is erroneous logic. They take one particular example and try to pretend that it belongs to everyone. That is the kind of nonsense we are facing here today. I am disappointed.
There is another example. A motion was proposed by the Reform Party to not have this bill go forward. Is that not somewhat contradictory? There are going to be changes made that are going to save Canadian taxpayers money, and that party wants to hoist it, stop it. If the Reform Party is so concerned about changes, let us go forward. Let us move. Let us go now.
This is the party that on a very serious matter called for quorum, knowing full well that there are members just behind the curtain who are having lunch. This is the kind of seriousness they apply to this debate.
This is the party that talks about opting out. It is not a question of opting out; it is a question of opting in. Members can opt in. The suggestion was that it was only available to Reform MPs. It is available to whoever chooses to do it out of the class of '93. Let us get with it. Let us deal with the facts.
I am pleased to observe that many colleagues spoke of the need for changes to the MP pension plan in the last Parliament, both here and outside of the House. I am delighted to note today that we are in fact going forward with Bill C-85, which delivers on the government's red book commitments to reform MP pensions to end double dipping and to set a minimum age at which pensions under the plan may be paid. Those were the promises that were made, but we did not stop there; we went beyond. In fact, Bill C-85 goes further than the red book commitments.
Of course that is not good enough for Reformers, because they want to exploit the situation. They would have exploited it even if it had been removed. They would have found something to say about it.
This bill will also reduce the pension benefit accrual rate under the MPs pension plan. In the future, instead of an average sessional indemnity of 5 per cent for each year of service, members will accrue benefits at a rate of 4 per cent of their average income over a 6-year period. That represents a 20 per cent reduction. But, of course, Reform members say this is nothing.
That 20 per cent reduction clearly shows the government's firm intention to cut spending, as well as the will of parliamentarians to make sacrifices like the rest of Canadians to help put our fiscal house in order.
I am proud to see that, once passed, the proposed amendments will result in a 33 per cent reduction of the cost, for taxpayers, of MP pensions. That 33 per cent reduction translates into savings of over $3 million for 1995 alone.
I want to congratulate the Prime Minister, as well as the hon. member for York Centre and President of the Treasury Board, for their role in this respect.
The proposed legislation includes another important element. Some members objected to the fact that MPs' participation in the pension plan is compulsory. They suggested that, if allowed to do so, they would withdraw from the plan.
The Prime Minister responded by promising MPs that they would be free to participate or not in the pension plan. Bill C-85 follows up on that commitment.
It is on the subject of optional participation in the pension plan that I wish to focus my remarks today. Hon. members have asked for that choice and will now be given it. It is a serious choice, with long term consequences, and I urge all hon. members to give the choice very careful consideration. In contemplating their decision, members should bear in mind the amendments of the bill will bring about features of the pension plan which some have found to be objectionable.
We are eliminating double dipping. Pensions based on future service will not be paid before a former member has reached 55 years of age. MP pension benefits are being pared down and taxpayers' costs will decrease significantly.
When Bill C-85 is given royal assent, a 60-day clock will start ticking; a 60-day period for passage of the bill within which members of the House will be able to make an option to continue their participation as pension plan members.
This is a one time opportunity. Hon. members who fail to sign and deliver their option to participate form within the 60-day time frame will cease to be pension plan members and their contributions to the MP pension plan account will be refunded to them.
In a few minutes I will speak further of the consequences of discontinuing plan participation. Now I wish to concentrate on the process of maintaining membership under the plan. I am informed that administrative officials of the House will contact each member immediately following passage of this bill. Advice and information on the option process will be provided and each member will be furnished with an option form on which they may specify their interest in continuing pension plan membership.
Each member who wishes to stay under the pension plan must complete the option form and return it to the House administration within 60 days of the royal assent day. This is a critical deadline and must not be missed by any member who chooses to maintain their status as a member of the MP pension scheme.
Therefore, I caution hon. members they should ensure they receive their option form and complete and return it before the deadline if they wish to stay under the plan.
I will complete and return this option form. I will continue to participate in the MPs pension plan. I have a wife and three children, and I want to ensure their future in the best possible way. Given the comments he made outside this House, I know that the President of the Treasury Board will also choose to stay under the plan. That plan is just one element of the global compensation package for MPs.
I also wish to point out that, according to independent studies, that plan is not overly generous. I am of the opinion that all members of this House work very hard and put in long hours. They earn their pay. My colleague from Richelieu proved the point in his speech this morning when he made the comparison between us and other parliamentary jurisdictions in Canada.
Let us not forget that past governments have consistently promoted retirement savings. Retirement plans are an important part of retirement planning. These plans provide substantial protection for people against the unforeseen, such as death or infirmity.
Lastly, the financial protection of MPs' survivors in case of death should be a central consideration in their decision whether to opt out of a parliamentary pension.
In my case, if I did not complete my term, basically, if I died, my wife and family would receive 60 per cent of the pension to which I would have been entitled. Partners and children must not be forgotten.
Notwithstanding the considerations which I have just outlined, I know there are members of the House who have
committed themselves to terminating their plan membership. Some of these members may already have other arrangements in place for their retirement and their survivors. Perhaps some are sufficiently wealthy that they need have no concern about their economic security or their family's in later years. There are some who will use their termination of plan membership as a political statement.
Whatever their reasons, I need to respect and I will respect their right to choose. The Prime Minister promised them the choice and now they will have it.
I hope hon. members planning to cease their participation in the MPs pension plan will consult with their families before making their final decision. This is a decision which will directly affect members' families as well as members themselves. Members should be aware of all of the consequences withdrawal from the pension plan will entail, particularly the consequences their choice will leave on their loved ones.
This will be a permanent choice. Those making a political statement with that choice will be bound by that statement. There will be no going back. Pension contributions will be refunded and periods of service in respect of which those refunds are paid or future periods where no contributions will have been made may never in future be counted under the pension plan.
Hon. members who fail to opt into the plan will remain as non-members for as long as they continue to serve in Parliament without a break in service. This will be the case whether they continue to serve in this honourable House or in the upper chamber.
I would once again advise MPs who are considering opting out of their pension plan to look carefully at the other pension vehicles available to them. They should also prepare for the unforeseen, such as infirmity, and consider the financial future of their survivors should they die.
If we were to sacrifice the coverage provided for under the parliamentary pension plan, what coverage would replace it and at what cost? We should all make an educated choice. I must insist that we cannot make such decisions without knowing beforehand all of the ramifications.
As I mentioned earlier, MPs who opt out of their pension plan will receive a full reimbursement of their contributions within 60 days of Bill C-85 receiving Royal Assent. I will take this opportunity to explain the terms and conditions of this refund.
For hon. members who joined the House for the first time at or after the beginning of this Parliament, on or after October 25, 1993, the process is quite straightforward. Members who fail to opt into the plan will be paid a refund of all of their pension contributions. For members with parliamentary service which occurred before October 25, 1993 the process is slightly more complicated. It depends on whether as of October 25, 1993 they were vested members under the pension plan.
To digress momentarily, under our pension plan a member of Parliament is considered to be a vested pension plan member upon completion of six years of service. Therefore when I speak of members who were vested as of October 25, 1993 I refer to those of my hon. colleagues who as of that date had been members for at least six years.
Under the bill a member who was not vested as of October 25, 1993, that is a member who did not have six years of service as of that date, and refrains from opting into the plan within the 60 days immediately following royal assent, will also be paid a refund of all of the pension contributions he or she has paid. This would include contributions made both before and after October 25, 1993.
If the member was vested as of October 25, 1993, the refund will be restricted to those pension contributions paid since that date. In this latter case, contributions paid for the six or more years of service which occurred prior to October 25, 1993 will be retained in the pension account to provide upon the member's eventual retirement from Parliament the vested pension benefit earned in respect of those years.
And since our pension contributions are paid into two different accounts, I must digress again.
The last time the pension plan for parliamentarians was amended, this was done to comply with pension plan registration rules provided under the Income Tax Act. As of January 1, 1992, parliamentarians have contributed to the basic retirement account and to an account referred to as the Retirement Compensation Arrangements Account.
Contributions to the basic account will be used to pay retirement allowances earned pursuant to Part I of the Members of Parliament Retiring Allowances Act, in other words, that part of the pension plan for parliamentarians that complies with the tax provisions governing registered retirement plans.
As for contributions made to the Retirement Compensation Arrangements Account, pursuant to Part II of the Act, these will be used to pay that portion of retirement allowances earned under the plan which exceed the maximum allowed for registered plans under the Income Tax Act.
Here I would like to say, in passing, that all employers in Canada may offer their employees a non-registered supplementary retirement plan similar to the retirement compensation arrangement.
In instances where refunds of pension contributions are to be paid to plan members, all contributions paid before January 1, 1992 may, if the member so wishes, be rolled over on a tax exempt basis to another registered retirement vehicle such as the registered retirement savings plan. For the sake of precision that would be in respect of members who had service before October 25, 1993 but who were not vested as of that date together with 4 per cent of sessional indemnities paid to the basic account under part I of the act since January 1, 1992.
Members wishing to roll over the contributions to an RRSP should consult administrative officials of the House for information on the forms and the process for effecting such a transfer.
However, since the retirement compensation arrangement is not an RRSP instrument, contributions paid into the RCA account pursuant to Part II of the Act cannot be rolled over to an RRSP. Consequently, members who decide to opt out of the retirement plan will receive directly the amounts they had contributed since January 1, 1992 to the RCA account, in other words, 7 per cent of sessional indemnities. Refunds of contributions to the RCA account will be taxed at source as income, to be declared by the member as part of his taxable income for the year in which the refund was made.
There is one last point I would like to make. I would like to explain another consequence of a member's opting out of the retirement plan and the resulting refund of contributions. Every year, a so-called pension adjustment is calculated on the basis of our regular contributions, and this figure is then communicated to Revenue Canada. This amount reflects the value of the retirement benefits we have earned through our contributions in a given year. This pension adjustment is then used for tax purposes, to calculate our maximum annual RRSP contribution, if any.
However, and this will be my last comment, under the Income Tax Act, a member who elects to recover contributions paid into the pension plan for parliamentarians will not be able to recover RRSP contribution entitlements he could not use during those years when he contributed to the pension plan for parliamentarians.
I am sorry, I would have liked to add certain other things, but my time is up.
